Certificate of Deposit
A negotiable short-term deposit receipt issued by a bank at a discount to face value.
Formula
Yield = [(Face Value - Price) / Price] x (365 / Days to Maturity) x 100
Unit
%
In depth
A certificate of deposit is a bank obligation, which generally makes it stronger credit than commercial paper from a corporate issuer of similar rating. Unlike an ordinary fixed deposit it is negotiable, so it can be sold before maturity in the money market rather than broken with a penalty. In India banks issue them for 7 days to one year with a minimum of ₹5 lakh, mainly to institutions and money market funds. Deposit insurance does not apply to a certificate of deposit, which is a distinction from a retail fixed deposit that matters if the bank fails.
Worked example
A 182-day CD of ₹10,00,000 face value at ₹9,66,000 yields (34,000 / 9,66,000) x (365 / 182) x 100 = 3.520% x 2.005 = 7.06% annualised.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Certificate of Deposit” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.